Solve clearly

C.7. A municipal bus company asks your help in determining what fare they should charge per passenger to pay the owning and operating costs of their buses. They borrow and lend at 1 = 10 percent. The buses run from 6:30 A.M. until 6:30 P.M., six days per week, 52 weeks per year (3,744 hours per year). They average 10 mph and pick up an average of two fares per mile. Assume all fares are credited at the end of the year. The buses last an average of 20 years. A typical tabulation of cash flow for the costs for one bus is shown in the following table: Year 0 $150,000 purchase new 10 25.00 break in gradient $17.00/hr O & M costs 11 26.50 17.00 12 28.00 3 18.00 first gradient payment 13 29.50 19.00 14 31.00 20.00 15 32.50 21.00 16 34.00 22.00 17 35.50 23.00 18 37.00 24.00 19 38.50 20 40.00/hr 20 salvage value $10,000 (a) Find the equivalent dollars per hour cost for the 20-year period (including purchase cost and salvage value). (Ans. A = $27.93/hr) (b) How much fare should be charged each customer to cover all costs and income listed above, assuming there are no fare increases over the 20-year period? (Ans. $1.40/passenger) (c) How much fare should be charged each passenger during the first year to cover all costs and income in the table above, assuming the fares are increased $0.05 per passenger per year for each year after the first year? (Ans. $1.08/passenger)